Monday, April 23, 2018

Offshore, EMEs, US boost Q4 '17 global banking - BIS

The upturn in international banking activity that began in the third quarter of 2017 gained momentum in the fourth quarter with lending to borrowers in offshore banking centers surging by $124 billion followed by a $55 billion rise to emerging market economies (EMEs) and a $45 billion increase in credit to borrowers from the United States, according to the Bank for International Settlements (BIS).
Total cross-border lending by global banks rose by $123 billion from end-September to end-December 2017 for annual growth of 2 percent and total outstanding claims have now reached $29 trillion, said Swiss-based BIS.
In the last few years, offshore banking centers have been one of the fastest growing areas of cross-border banking, with Hong Kong and Singapore recording the largest increases in the fourth quarter of last year with lending of $63 billion and $41 billion, respectively.
And in 2017 outstanding claims on offshore centers by global banks topped the previous peak of $4.3 trillion in March 2008, during the Global Financial Crises, with total claims now at $4.6 trillion end-2017, said BIS, known as the central bankers' bank.
Most of these claims were denominated in U.S. dollars, $2.8 trillion, followed by $0.7 trillion in yen-lending and $0.3 trillion in euros. Lending activity between offices in the same banking group rose by $134 billion.
Cross-border lending to emerging markets rose for the fourth consecutive quarter, with the $55 billion rise in the fourth quarter boosting annual growth to 9 percent, driven by lending to Africa, the Middle East and emerging Asia.
After edging up in the first three quarters of last year, credit to borrowers from Russia again fell in the fourth quarter by $8 billion to end the year at $99 billion, sharply down from $189 billion in early 2013.
Lending to borrowers in Latin America also continued to shrink, down by $12 billion in the fourth quarter, bringing the annual fall in 2017 to 3 percent, similar to the decline seen in 2016.
Credit to Brazil and Mexico saw the largest quarterly declines while claims on Chile and Argentina rose, BIS said.
Japanese banks have expanded their global presence since 2009 - they surpassed French banks in 2011, U.S. banks in 2013 and UK banks in 2015 - and now have the largest international balance sheets, with total foreign claims of $4 trillion at the end of 2017.